No relief from ATM fees

WASHINGTON — Consumers won’t get any relief from ATM fees since a Senate proposal for lower fees failed Thursday to make it into financial regulatory reform legislation.

The proposal for government-controlled fees met with disapproval among Big Country lawmakers and area bankers.

“If they start capping ATM fees, one of the things you’ll see is a lot less ATM machines around,” said Ron Butler, president and chief executive officer of First Financial Bank of Abilene.

The first to disappear would be automated teller machines not owned by banks, Butler said. They rely solely on fees.

The number of ATMs has grown to more than 400,000 nationwide, according to Brookings Institution economist Robert E. Litan.

Consumer demand and operator profitability have resulted in the abundance of ATMs, said Gary Cox, president and chief executive officer of Texas Bank in San Angelo.

“I think the system has worked well as it is and more regulation would be a negative,” Cox said.

Iowa Democratic Sen. Tom Harkin’s repeated efforts to leverage an amendment into the massive Senate version of the financial reform bill failed Thursday when the Senate voted to limit debate on the bill, closing it to amendments.

It’s unclear whether Harkin will try again later in the legislative process, a congressional aide said Thursday afternoon. The senator also changed his proposal, which was, at first, to cap ATM fees at 50 cents.

He reworked the amendment to require any ATM fee to bear a reasonable relation to the cost of processing a transaction. The new Consumer Financial Protection Bureau created in the bill would ensure fair fees.

Harkin estimated the cost of an ATM transaction at 36 cents.

The average charge is $3.54, according to Bankrate.com.

“That fee needs to relate to what it actually costs to process the transaction, not just the maximum that they think they can get away with,” Harkin said.

Butler said banks are taking the blame for unfair fees, and he disagrees.

First Financial only charges its customers ATM fees for using another bank’s machine, he said.

The First Financial fee is $2 for its customers using “foreign” ATMS and for other banks’ customers using First Financial’s machines, Butler said.

The fees alone do not generate a profit for First Financial, considering the bank’s investment in providing ATMs, Butler said.

Costs to set up an ATM can add up to more than $100,000, he said.

“We have those ATM machines as part of our infrastructure of being able to serve our customers,” Butler said. “It’s not all about the fees.”

Harkin’s amendment gained widespread support among consumer advocacy groups, including the U.S. Public Interest Research Group, the Consumer Federation of America, Consumer Action, Consumers Union and the National Consumer Law Center.

Ed Mierzwinski of the U.S. Public Interest Research Group wasn’t swayed by warnings the extensive network of ATMs would unravel.

Texas Sen. John Cornyn said he doesn’t like paying ATM fees any more than the next person.

“But I really wonder whether it’s the job of the federal government to cap fees or to fix prices when it comes to ordinary consumer transactions,” said Cornyn, a Republican. “I think I would rather leave that up to the market to regulate.”

Abilene Congressman and former banker Randy Neugebauer said he’s concerned about the unintended consequences of Congress micromanaging the financial sector.

“Enacting policy of this type could lead to an ineffective payment system and higher fees on other services,” Neugebauer said.

Big Country Congressman Mac Thornberry said ATM users have choices.

“I’ve walked away before if I thought the fee was too much,” the Republican from Clarendon said.

Big Country Congressman Mike Conaway said capping ATM fees sounds good in theory.

“But in practice, it would limit our ability to have ATM machines virtually around the world that you can access with a piece of plastic to get your money,” the Midland Republican said.

Texas regional reporter Trish Choate can be reached at 202-408-2709 or choatet@shns.com.